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The child care industry has expanded rapidly in recent years as a result of growing labor force participation by mothers of young children. Much, but not all, of the child care is being provided through the market. In this paper, a model of family labor supply incorporating both market and nonmarket child care is specified and estimated. The empirical analysis is performed using data from the 1980 baseline household survey of the Employment Opportunity Pilot Projects. The results suggest that both the decision to become employed and the decision to purchase market child care are sensitive to child-care costs. The estimated price elasticity with respect to employment is -0.38 while respect to market care is -0.34.


The following article appeared in The Review of Economics and Statistics 70:3 (August 1988) Pages: 374-381. The Review of Economics and Statistics © 1988 The MIT Press. The original publication is available at The Review of Economics and Statistics homepage can be found at